There is no doubt that the solar sector has taken its lumps of late, but the industry may be poised for a comeback. At least that appears to be the view of the Citigroup (C) global solar sector research team.

The analysts on the team announced in a research note Wednesday that they were initiating First Solar (FSLR), MEMC Electronic Materials (WFR) and SunPower (SPWR) with a recommendation to buy shares. Below is a quick look at how these three stocks have fared and what analysts in general expect from them.

The Citigroup team also rated Advanced Energy Industries (AEIS) as a "buy." But they were less enthusiastic about Trina Solar (TSL) and Yingli Green Energy (YGE), which they initiated at "neutral." And Suntech Power (STP) got the dreaded "sell" rating from Citigroup.

First Solar

This Arizona-based maker of solar modules and photovoltaic solar power systems has a market cap near $2.5 billion. Its forward earnings multiple is less than the industry average price-to-earnings (P/E) ratio, but the long-term earnings per share (EPS) growth forecast is in negative territory. So is the return on equity, though the operating margin is greater than the industry average.

The shares sold short at the mid-January settlement date represent less than 32% of the float. However, that is the lowest level of short interest since March of 2012.

Of the 26 analysts who follow the stock that were polled by Thomson/First Call, only three of them recommend buying shares. The current share price is well above the analysts' mean price target, or where they expect the share price to go. But the Citigroup price target of $41 represents more than 25% potential upside.

The share price rose more than 52% in the past six months. Yet the stock has underperformed competitor Suntech Power in that time, though it has outperformed the broader markets.

MEMC Electronic Materials

This Missouri maker of silicon wafers for the semiconductor industry and provider of solar energy services sports a market cap of about $1 billion. The long-term EPS growth forecast is about 15%, and the forward earnings multiple is less than the industry average P/E ratio. Here, too, the return on equity is in negative territory.

The short interest is less than 8% of the float, and the number of shares sold short has been slowly dwindling since November.

Only six out of the 18 analysts surveyed recommend buying shares. They do not feel there is much room for movement, as their mean price target is only marginally higher than the current share price. But Citigroup's new $5.40 price target represents about 19% potential upside.

Shares are trading 112% higher than six months ago, including more than 22% year to date. The stock has outperformed First Solar and SunPower, as well as the broader markets, over the past six months.

SunPower

Based in California, this integrated solar products and services company has a market cap of a little less than $1 billion. Again the return on equity is in the red, and the operating margin is less than the industry average. The long-term EPS growth forecast is more than 22%, but even the forward earnings multiple is higher than the industry average P/E ratio.

Note that the short interest was more than 10% of the float at in mid-January, which was the highest number of shares sold short in at least a year.

The consensus recommendation of the 17 analysts surveyed is to hold shares, and it has been for at least three months. The current share price has overrun the mean price target. But Citigroup's $12 target price is about 30% higher than the current price.

The share price spiked at the beginning of the year but has pulled back more than 11% since then. Still, over the past six months, the stock has outperformed competitors First Solar and Suntech Power, as well as the broader markets. 

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